The continued tight labor market, the decline in real income of residents, the rising cost of living, and the demand for the service industry is still in a recovery stage. This is why the U.S. job market remains resilient.

article 丨Ming Ming Ming Bond Research Team

Core Perspectives

U.S. non-agricultural data in August showed that although the labor market performance exceeded expectations, employment growth slowed down. The continued tight labor market, the decline in real income of residents, the rising cost of living, and the demand for the service industry is still in a recovery stage. This is why the U.S. job market remains resilient. The employment population grew across the board in August, but the growth of the service industry, which is the core support, slowed down. Employment intention has increased significantly, the tension in the employment market has been marginally eased, and the wage growth rate has fallen marginally. The judgment on the extent of the Fed's interest rate hike in September 4 still needs to wait for the disclosure of the August inflation data.

The non-farm employment population in the United States increased by 315,000 after the seasonal adjustment in August, slightly higher than the expected 298,000, and the unemployment rate rose to 3.7%, the first time since January 2022 to rise. The rise in unemployment is mainly due to some people returning to the labor market but not finding jobs. The monthly increase in unemployment rate is not a sign that the job market is beginning to deteriorate. Overall, the job market performed strongly in August, but returned to the weaker trend in July.

The labor market remains tight, the actual income of residents is declining, the cost of living increases, and the demand for the service industry is still in the recovery stage. This is why the U.S. job market remains resilient. After February 2020, due to the spread of the new crown epidemic, some people are unable or unwilling to work, the number of immigrants has decreased, and the number of people retired early has increased. Many people have withdrawn from the labor market and have not yet fully returned, so the labor market is facing a continuous supply and demand situation. The number of job openings in the United States is still running at a high level, and the number of people applying for unemployment benefits for the first time that week is still at a historical low. The sharp move of the Beveridge curve after the epidemic also reflects the significant increase in the tension in the US job market after the epidemic. At present, against the backdrop of slowing economic and high inflation, negative growth in residents' real income has driven residents' willingness to return to the labor market to increase. In terms of supply, the service industry still has resilience to support the strong growth of new non-agricultural employment.

The employment population has grown across the board, and the growth of the service industry has slowed down. : According to industry, the industries that contributed the highest number of new non-farm employment in the United States in August came from professional and commercial services, healthcare and retail industries. Overall, the service industry still supports strong growth in non-agricultural employment, but the demand for recruitment in the service industry is showing signs of slowing down, which may be due to the peak season of summer travel and tourism and slowing economic activity. Currently, the number of non-agricultural employment in most industries has returned to pre-epidemic levels.

Employment intention has increased significantly, and wage growth has declined marginally. labor participation rate has increased significantly and is higher than expected, reflecting the marginal easing of the employment market tension. At present, against the background of a sharp increase in the cost of living for residents, negative real income growth and a rapid wage growth, the willingness of employed people to return to the labor market has increased recently. The average hourly wage growth rate fell from the high point last month. Although the growth rate of slowed down marginally from the previous month, the growth rate of was still relatively high compared with the previous month, and the labor costs of non-agricultural units hit a new high in the second quarter. Against the background of the still very tight employment market, the risk of wages and prices spiraling up in the future cannot be ignored. Short-term wage growth is expected to be difficult to fall sharply, which will also constitute the stickiness of core service inflation and overall inflation.

8 non-farm data reflects a marginal decline in inflation risks, while Fed tightening expectations have declined. 8 new non-farm employment returns to the slowdown trend before July, and wage growth has also fallen to the quarter-on-month growth level before July (second quarter). The suppression of demand from the Fed's tightening may begin to appear. Although the unemployment rate rose by 0.2% in August, historically, unemployment rate often experiences low-level fluctuations when it is at a cyclical low, and a single-month change does not mean the future direction. If the future unemployment rate rises by cyclical lows by more than or equal to 0.3%, then we need to pay more attention to whether its changes will evolve into a trend increase. After the non-agricultural data was disclosed in August, the market's rate hike is expected to cool down.Currently, we believe that the judgment of the Fed's interest rate hike in September still needs to wait for the disclosure of the August inflation data. If inflation does not exceed expectations, the probability of hiking rate hiking in in September may be higher, and if inflation rises beyond expectations, there is a possibility of hiking interest rates 75bps in September.

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Data

Data

US Department of Labor released data showing that after the seasonal adjustment in the United States, the non-farm employment population increased by 315,000, with an expected increase of 298,000, with the previous value down from an increase of 528,000 to an increase of 526,000; the unemployment rate in August was 3.7%, with an expected 3.5%, with an expected value of 3.5%, with an expected value of 3.5%. The average hourly wage in August increased by 5.2% year-on-year, with an expected increase of 5.3%, with an expected value of 5.2%; the average hourly wage increased by 0.3% month-on-month, with an expected increase of 0.4%, with an expected value of 0.5%; the labor participation rate in August was 62.4%, with an expected value of 62.1%.

Comments

Although the labor market performance exceeded expectations, employment growth slowed down

Judging from the changes in the number of non-farm employment, the number of non-farm employment in the United States increased by 315,000 after the quarterly adjustment in August, slightly higher than the expected 298,000, and the unemployment rate rose to 3.7%, the first time it turned to an increase since January 2022. At the same time, non-agricultural population was downgraded from an increase of 528,000 in July to an increase of 526,000, and non-agricultural population in June from an increase of 398,000 to an increase of 293,000. The total decrease was 107,000 after the downgraded in June and July. The unemployment rate rose 0.2% to 3.7%, higher than expected and 3.5% in the previous value, making it the first time since January 2022 that the unemployment rate turned to an increase. The number of new non-farm employment in the United States in August was slightly higher than market expectations. The rise in unemployment rate was mainly due to some people returning to the labor market (reflected by the sharp increase in labor participation rate in ) but have not found a job yet. The monthly increase in unemployment rate is less than 0.3% does not mean that the employment market has begun to deteriorate. Overall, the job market performed strongly in August, but returned to the weaker trend in July.

The labor market is still tight, the actual income of residents is declining, the cost of living is rising, and the demand for the service industry is still in the recovery stage. This is why the U.S. job market remains resilient. After February 2020, due to the spread of the new crown epidemic, some people are unable or unwilling to work, the number of immigrants has decreased, and the number of people retired early has increased. Many people have withdrawn from the labor market and have not yet fully returned, so the labor market is facing a continuous supply and demand situation. Currently, the number of job vacancies in the United States is still running at a high level, with one unemployed person corresponding to two job vacancies, and the number of people applying for unemployment benefits for the first time that week is still at a historical low. The sharp move of the Beveridge curve after the epidemic also reflects the significant increase in the tension in the US job market after the epidemic. At present, against the backdrop of slowing economic and high inflation, negative growth in residents' real income has driven residents' willingness to return to the labor market to increase. In terms of supply, the service industry still has resilience to support the strong growth of new non-agricultural employment.

Employment population has grown across the board, and the growth of the service industry has slowed down

According to industry, the industries that contributed the highest number of new non-agricultural employment in the United States in August came from professional and commercial services, health care and retail industries. Specifically, the number of new jobs in professional and commercial services in the United States increased by 68,000 in August, the industry with the largest number of new non-agricultural employment in August; the number of new jobs in the health care industry increased by 48,000, the industry with the second largest number of new jobs; the number of new jobs in the retail industry increased by 44,000, the industry with the third largest number of new jobs.

From the industry data, the new employment personnel in the professional and commercial service industries in August mainly came from computer system design and related services, management and technical consulting services, construction and engineering services, and scientific research and development services. The number of healthcare employment new jobs mainly come from doctors, hospitals, nursing and residential care facilities. The new jobs in the retail trade are mainly from department stores, food and beverage stores, health and personal care stores, and building materials and garden supplies stores.

Overall, the service industry still supports strong growth in non-agricultural employment, but the demand for recruitment in the service industry shows signs of slowing down. Although the service industry is still the core support industry for the new non-agricultural employment, the service industry slowed down across the board in August, which may be due to the peak season of summer travel and tourism and the slowdown in economic activities.Currently, the number of non-agricultural employment in most industries has returned to the pre-epidemic level. Due to the fact that the epidemic still fluctuates phasedly and the spread of the epidemic has a high inhibitory effect on the leisure and hotel industry, the leisure and hotel industry are still at a certain distance from the pre-epidemic level. In the future, the recruitment demand for the leisure and hotel industry still has a certain room for recovery and upward development.

Employment willingness has risen sharply, and wage growth rate has fallen marginally

Labor participation rate has increased significantly and is higher than expected, reflecting the marginal easing of the employment market tension. html In August, the U.S. labor participation rate recorded 62.4%, higher than expected 62.2%, and higher than the previous value of 62.1%. Currently, against the background of a sharp increase in the cost of living, negative real income growth and a rapid wage growth, the willingness of employed people to return to the labor market has increased recently.

Average hourly wage growth rate has fallen from the high point of last month. The risk of wages and prices spiraling upward has declined marginally but is still high. The average hourly wage in was 0.3% month-on-month, 0.5% lower than the previous value and 0.4% lower than the expected month-on-month growth rate in August was consistent with the second quarter growth rate; the average hourly wage was 5.2% year-on-year, 5.3% lower than the expected year-on-year, and the same as the previous value. The current wage growth rate fell back to the previous quarter-on-month level of 0.3% in the second quarter after a sharp rise in July. Although the month-on-month growth rate slowed down marginally, the year-on-year growth rate was still relatively high, and the labor costs of non-agricultural units hit a new high in the second quarter. Against the background of the still very tight employment market, the risk of spiraling wages and prices in the future cannot be ignored. Short-term wage growth is expected to be difficult to fall sharply, which will also constitute the stickiness of core service inflation and overall inflation.

The impact of the Federal Reserve tightening on the job market has begun to show results

8 non-farm data reflects a marginal decline in inflation risks, and the Federal Reserve's tightening expectations have declined. 8 new non-farm employment returns to the slowdown trend before July, and wage growth has also fallen to the quarter-on-month growth level before July (second quarter). The suppression of demand from the Fed's tightening may begin to appear. Although the unemployment rate rose by 0.2% in August, historically, unemployment rate often experiences low-level fluctuations when it is at a cyclical low, and a single-month change does not mean the future direction. If the future unemployment rate rises by cyclical lows by more than or equal to 0.3%, then we need to pay more attention to whether its changes will evolve into a trend increase. After the non-agricultural data was disclosed in August, market interest rate hikes have cooled down. Currently, we believe that the judgment of the Fed's interest rate hike in September still needs to wait for the disclosure of the August inflation data. If inflation does not exceed expectations, the probability of 50bps interest rate hike in September may be higher. If inflation rises beyond expectations, there is a possibility of 75bps interest rate hike in September.

This article comes from the financial industry